8-KOther Events

MORGAN STANLEY 8-K Report, Corporate Update (Jan 21, 2022)

Filed January 21, 2022For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley (MS) filed an 8-K on January 21, 2022, detailing the 2021 compensation for its Chairman and CEO, James P. Gorman. The compensation was determined based on Mr. Gorman's strong individual performance and the Firm's record financial achievements in 2021, which met or exceeded stated two-year objectives. This included record revenues, profits, and earnings per share, alongside improvements in key performance metrics like ROTCE and efficiency ratio. The report highlights significant shareholder returns, a substantial increase in market value, and successful integration of recent acquisitions, positioning the Firm for continued growth. Mr. Gorman's total compensation for 2021 was set at $35 million, an increase from the prior year. This compensation package includes a base salary, cash bonus, deferred equity, and a significant performance-vested equity award. A substantial portion of his incentive compensation is deferred and equity-based, aligning his interests with those of shareholders. The performance-vested portion of the award has specific targets tied to return on tangible common equity and relative total shareholder return over a three-year period, with adjusted targets reflecting the Firm's strategic transformation.

Key Highlights

  • 1Morgan Stanley achieved record financial performance in 2021 with approximately $60 billion in net revenues and $15 billion in net income.
  • 2CEO James P. Gorman's total 2021 compensation was set at $35 million, reflecting his performance and the company's record results.
  • 3The Firm's stock price increased by 43% in 2021, adding approximately $50 billion in market value.
  • 4Shareholder returns were increased through a doubling of the quarterly dividend to $0.70 and $11 billion in share repurchases.
  • 5Key business segments, including Institutional Securities, Wealth Management, and Investment Management, reported strong revenues and asset growth.
  • 6The integration of E*TRADE and Eaton Vance acquisitions was successful, contributing to a combined $6.5 trillion in client assets.
  • 7A significant portion of Mr. Gorman's compensation is deferred and performance-based equity, aligning with shareholder interests.

Frequently Asked Questions

This 8-K filing primarily announces the 2021 compensation for Morgan Stanley's Chairman and CEO, James P. Gorman, and provides context on the Firm's strong financial performance in 2021 that supported this compensation decision.

In 2021, Morgan Stanley reported record financial performance, including approximately $60 billion in net revenues, $15 billion in net income, and $8.03 in earnings per share. The Firm also met or exceeded its two-year objectives for ROTCE (19.8%) and maintained a strong efficiency ratio (67%).

Mr. Gorman's 2021 compensation totals $35 million, comprising a $1.5 million base salary, an $8.375 million cash bonus, a $5.025 million deferred equity award, and a $20.1 million performance-vested equity award. A significant portion (75%) of his incentive compensation is deferred over three years, and 100% of deferred compensation is in equity awards. Additionally, 60% of his bonus was delivered in performance-vested equity.

The performance-vested equity award is contingent upon the Firm meeting predetermined performance goals related to (a) average Firm return on tangible common equity and (b) relative total shareholder return over a three-year period. The return on tangible common equity goal was adjusted upwards to 16% for maximum payout.